Lies, damn lies, and the most unequal country

Investment Analysis Clubs Macro Economic Trends and Risks
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I was surfing Youtube and found this video for which the provocative title did its job and made me look:

The claim: The Netherlands is the “most unequal country on earth.”
https://www.youtube.com/watch?v=Ot4qdCs54ZE

The short version is that it isn’t the most unequal in incomes, but wealth–because there are some huge dynasties in The Netherlands where wealth has compounded for hundreds of years; meanwhile, many Dutch famililies have a “negative net worth” due to the ability to take out a 110% mortgage which means many families have large mortgage debts.

The more common way to define “unequal” is the GINI coefficient, which measures income inequality, where we find countries like South Africa, Brazil, and a host of other African and South/Central American countries at the top of the list.
https://worldpopulationreview.com/country-rankings/wealth-in…

Where is The Netherlands? 14th best, among the Scandinavian countries–about where you would expect it to be.

And while the claim in the video appears to be true, it is misleading in a few ways. First, it claims that the GINI coefficient is used “because income inequality drives wealth inequality.” While that may be one conclusion, it isn’t the “raison d’etre” of the GINI.

The video also implies that wealth inequality is just as bad for society as income inequality. Considering that the Dutch have a very high quality of life, are one of the happiest countries on earth, and that your average Dutch person seems quite satisfied with their life, this simply rings false.

Finally, the video claims that the extreme wealth inequality in The Netherlands “proves” that “taxing the rich doesn’t work.” Of course, this ignores that every Dutch person has access to great healthcare, education, great infrastructure, and a wide range of social benefits that lift up the working class to flatten the GINI index and provide the overall population a high quality of life.

If your company came to you tomorrow offering a transfer to a new location, which would you choose:

The Netherlands
Central African Republic
Honduras
Bulgaria

Obviously you can’t go to The Netherlands. The Internet says it’s an awful place.

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Obviously you can’t go to The Netherlands. The Internet says it’s an awful place.

We lived (in Germany) for 13 years but my office was a couple hundred meters from the Dutch border. We often went to the Market in Heerlen on the weekends. At first we needed a passport but once the EU got going the border crossing customs office got turned into a very good restaurant.

When decision time came to go home or stay another seven years for a tax free NATO pension I lost the vote to stay to my Nova Scotian wife. I still regret not having stayed.

Great place to live.

Tim

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Does a vast majority of Americans have jobs where a “company will transfer them” abroad?

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Finally, the video claims that the extreme wealth inequality in The Netherlands “proves” that “taxing the rich doesn’t work.” Of course, this ignores that every Dutch person has access to great healthcare, education, great infrastructure, and a wide range of social benefits that lift up the working class to flatten the GINI index and provide the overall population a high quality of life.

As long as people have these fundamental things, then all is well.

But you can’t provide them without “taxing the rich.”

So, tax the rich, to provide “great healthcare, education, great infrastructure, and a wide range of social benefits that lift up the working class.”

I don’t know why we go round and round on this.

Tax the rich.

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Does a vast majority of Americans have jobs where a “company will transfer them” abroad?

No we just shipped their jobs overseas and then chastise them for not obtaining a university certification for employment.

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I don’t know why we go round and round on this.

Tax the rich.

Yes, tax the rich, but only to the point they don’t rebel. Supply and Demand works with taxes like with any other economic transaction. People don’t object when they get fair value for their taxes. They hate “punitive taxes.” There is a group of people who have never learned that lesson.

The Captain

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As long as people have these fundamental things, then all is well.
But you can’t provide them without “taxing the rich.”
So, tax the rich, to provide “great healthcare, education, great infrastructure, and a wide range of social benefits that lift up the working class.”

IIRC, the European model depends a lot on taxing the middle class, e.g., a 20% VAT.

DB2

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If your company came to you tomorrow offering a transfer to a new location, which would you choose:

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Estonia or Ireland of course.

Jaak

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IIRC, the European model depends a lot on taxing the middle class, e.g., a 20% VAT.

Portugal VAT:
Produce 5%
Processed food 13%
Other 23%

VAT might be ‘regressive’ but it is hard to evade and less likely to turn high earner citizens into ex-pats.

The Captain

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Companies that transfer people abroad

Most multinational companies have offices around the globe. Some are staffed by international professionals. Most like to send people to jobs overseas to improve communications, learn the cultures, and broaden their experience–ideally for future promotions.

These are usually known as ex-patriot programs where people go usually for two years. But some decide to stay permanent.

Rhone-Poulenc a French compay, owned houses and cars in the Princeton, NJ area for visiting expatriots. Americans were recruited to work in France. Others worked in Asia or South America. A French school in Princeton made it easier for families with children.

Yes, versatility, ability to adapt, and foreign language skills are valued.

Many companies have programs.

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IIRC, the European model depends a lot on taxing the middle class, e.g., a 20% VAT.

FWIW my take is that the VAT, although regressive is fair—in the context of the overall tax system in Europe.

Working class people don’t pay much in income tax or capital gains, yet they are going to consume the free education and healthcare. The VAT is their contribution.

Taxing only the rich is not fair. Only using regressive taxes is even less fair.

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I would point out that, to the consumer, there is little difference between a VAT (which is bundled into the price tag when you buy in a store) or the US sales tax (which is added on top of the price when you pay). The functional difference is that the VAT (or GST) is usually a federal level tax and our sales taxes are levied by the local or state level.

Jeff

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I would point out that, to the consumer, there is little difference between a VAT (which is bundled into the price tag when you buy in a store) or the US sales tax…

Well, in practical terms there is. VAT is pretty much a stealth tax and in the countries that use this method of indirect taxation, you’ll almost certainly see rates that are dramatically higher than any state sales tax in the US.

VAT was introduced in the early 1970s in the UK at something like 7% and on a fairly limited number of items. I can recall my dad complaining that it was the thin end of a wedge and it wouldn’t stay at that rate for long…and it didn’t.

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If your company came to you tomorrow offering a transfer to a new location, which would you choose:

The Netherlands
Central African Republic
Honduras
Bulgaria

Most likely Netherlands. But I’d seriously consider Bulgaria: lovely beaches, rugged mountains, amazing historic sites, big-city life in Sophia, hop-skip to Greece, Turkey, Mediterranean Sea, very inexpensive, and I’ve got some contacts there.

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But I’d seriously consider Bulgaria: lovely beaches, rugged mountains, amazing historic sites, big-city life in Sophia, hop-skip to Greece, Turkey, Mediterranean Sea, very inexpensive, and I’ve got some contacts there.

Bulgarian yogurt! Lactobacillus bulgaricus! (available at Amazon).

https://bacillusbulgaricus.com/bulgarian-yogurt/

The Captain
loves Bulgarian yogurt. In Portugal I get Greek yogurt.

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Yogurt is the great international equalizer. During the runup to the war in Iraq, when the US was agog with Freedom Fries and boycotting French wines because France was part of the “Old Europe” which wanted to further research whether Iraq had WMD’s. But no one suggested boycotting Dannon yogurt (which is owned by a French company).

In fact Chobani, one of the leading providers of “Greek” yogurt in the US is, in fact, owned by someone of Turkish background. (And yes, I know that Greeks don’t admit that the recent usurpation of Anatolia by the Turks has changed its ownership).

Jeff
(Currently re-reading “The Prince” by Machiavelli and finding it still relevant)

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